Sanctions & Export Controls: EU imposes additional sanctions on Belarus and on Russian private military entity

In the Netherlands, parliament proposed several resolutions regarding sanctions on Belarus and Russia. At the European level, the EU Commission proposed new regulations to counter migrant trafficking and economic coercion by third countries. The EU also imposed new sanctions on Belarus and the Russian Wagner group and agreed with the US to impose strict sanctions on Russia in case of Russian aggression vis-à-vis Ukraine. This, and more, in our newsletter.

1. The Netherlands

  • The Netherlands – Supreme Court prohibits ING from terminating a banking account despite money laundering risks – On 5 November 2021, the Dutch Supreme Court ruled that banks may be under the obligation to continue to offer bank account services to non-consumers despite money laundering risks. The ruling concerned a civil dispute between ING Bank N.V. (“ING”) and Yin Yang Exploitatie B.V. (“Yin Yang”), a company offering sauna services. ING notified Yin Yang of its intent to terminate its banking account due to money laundering risks. The bank determined that Yin Yang, amongst others, deposited nearly EUR 5 million in cash compared to approximately EUR 1 million in cashless payments. The Supreme Court ruled that banks are presumed to have the obligation towards non-consumers to offer a payment account (cf. Article 4:71 of the Financial Supervision Act). The Supreme Court stressed that without a payment account, it is virtually impossible to participate in society and to run a business. While banks may have a legitimate interest in refusing customers based on the Anti-Money Laundering and Anti-Terrorist Financing Act, the court judged that – under the circumstances of the present case – the interest of ING to prevent money laundering did not stand in the way of the obligation to provide a banking account. The judgment comes at a time when banks in The Netherlands are increasingly taking the drastic step of terminating accounts out of an overabundance of compliance. The Supreme Court’s strong message is a welcome next step in this discussion.

  • Dutch Parliament proposes to expand Belarus sanctions regime – On 6 December 2021, Dutch parliament debated the European summit on 16 and 17 December 16. Member of Parliament Kati Piri intoduced a motion urging the government to investigate the possibility of expanding the scope of EU sanctions on Belarus. Currently, the sanctions on Belarus limit the possibility of entering into new trading contracts with sanctioned entities from the date that the Belarus sanctioned entered into force. However, the designations do not have any consequence for pre-existing contracts. Mrs. Piri and several other members of parliament criticised this omission in the current sanctions regime, as they believe this would reduce the effectiveness of the sanctions. Therefore, they want the Dutch government to find a way to include trade contracts which already exist into the next round of sanctions on Belarus while potentially compensating any damage for European business. Additionally, Mrs. Piri expressed concerns regarding the fact that there is no significant decrease in trade between the EU and Belarus, which could indicate a lack of effectiveness of the sanctions imposed so far. Minister of Foreign Affairs Knapen promised to address these concerns in an upcoming letter to the parliament.

2. The European Union

  • EU (New regulation proposed to prevent commercial transporters from being involved in migrant trafficking) On 23 November 2021, the European Commission published a proposal for a regulation aimed at limiting the use of commercial means of transport in the trafficking of migrants and other persons. Any natural or legal person who provides commercial transportation services through any mode of transport and either smuggles or assists in the smuggling of migrants could face a number of restrictions. These include the suspension of the right to refuel in the EU, to enter EU ports and to transit through the territory of the EU, amongst others.

    In a joint communication addressed to the other EU institutions, the Commission explained that the need for this regulation was demonstrated during the sudden increase of migrants coming from Belarus throughout November. The Commission believes that this influx would not have been possible without commercial transport operators contributing directly or indirectly to migrant smuggling, and therefore aims to restrict transport operators who aid or participate in said smuggling. The joint communication also provides a number of additional initiatives to combat migrant trafficking and the use of migrants by Belarus to put pressure on the EU. These include offering €3,5 million to parties such as the International Organisation for Migration and the Iraqi government to facilitate the voluntary return of migrants, raising awareness of migrant smuggling at other international key players such as the International Civil Aviation Organisation and assistance from Frontex in accelerating the processing of asylum applications.

  • EU (EU implements fifth round of sanctions on Belarus) – On 2 December 2021, the European Council imposed a new set of sanctions on Belarus. This time, 17 individuals and 11 entities are targeted, including members of the judicial branch and political officials. They are being accused of repressing the Belarussian democratic opposition and organising illegal border crossings of migrants into the EU. The financial assets of these individuals and entities are frozen, and they are prohibited from entering or transiting through EU territory.

    This is the fifth package of sanctions imposed on Belarus following the controversial 2020 elections. The previous sanction packages were featured in previous editions of our newsletter. Since October 2020, the EU has sanctioned a total of 183 individuals and 26 entities in Belarus. On 6 December 2021, the Belarussian Ministry of Foreign Affairs announced plans to impose its own sanctions on the EU. These measures include an import ban on some goods from the EU, UK, US and Canada along with restrictions on airlines of said countries. These measures are to be imposed starting from January 1st.

  • EU (Introduction of anti-coercion instrument) ­– On 8 December 2021, the European Commission submitted a proposal for a Regulation on the protection of the EU and its Member States from economic coercion by third countries. Economic coercion is the phenomenon whereby a third country threatens or actually imposes trade-restrictive measures against the Union or its member states for the purpose of making a particular change or policy choice. Today, strengthening the EU’s toolbox is high on the agenda of the Union´s trade policy due to increasing tensions in the geo-economic context. As an example, take the development of trade weaponization, where countries impose economic pressure on a target to induce change in trade patterns in the interest of political or economic objectives. Recently, countries such as China and the US (at the time of the Trump-administration) have already been accused by the EU of using trade as a political tool. The proposal follows the Joint Declaration of the Commission, the Council and the European Parliament of 2 February 2021 to remedy a legislative gap for acting against economic coercion by third countries.

    The envisaged instrument is designed to providing member states with the ability to respond to coercive measures in a structured, uniform manner. By first starting the dialogue, and secondly, if necessary, counteract economic coercion by reacting with a tailor-made and proportional response for each situation. It remains to be seen whether this legal instrument in practice will function as a deterrent to economic coercion. Countermeasures that the EU can take as a last resort may include the complete restriction of imports from a third country or imposing tariffs, restrictions on services and investments and steps that limit access to the internal market of the Union. As a next step the European Parliament and the Council will discuss and potentially amend the Commission´s proposal before it will be adopted.

  • EU sanctions the Wagner Group and related individuals – On 13 December 2021, the European Council imposed restrictive measures on the Wagner group, a Russian private military entity, along with eight individuals and three entities associated with it. There is no specific company which uses the Wagner name. Instead, the Wagner group is described as a network of enterprises and mercenaries which engage in activities such as paramilitary services in conflict zones around the world.

    The European Council has accused operatives of the Wagner group of engaging in subversive activities, such as serious human rights abuses and destabilising actions in Ukraine, Syria, Libya, the Central African Republic, Sudan and Mozambique. It bases these accusations on reports from the UN Office of the High Commissioner for Human Rights Additionally, the Wagner group is considered by the EU to be part of Russia’s strategy of hybrid warfare, which allows the Russian government to promote its interests in foreign conflicts without becoming directly involved. This includes the use of private mercenaries instead of official Russian troops. Through these measures, the Council aims to take action against these activities which threaten international peace and security, and breach international law.

    While the Wagner group has been active since 2014 in Ukraine, France has recently pushed for these measures as it argues the presence of the Wagner group in the Sahel region, including former colonies of France, has had a destabilising effect. The sanctions imposed against the associates of the Wagner group consist of asset freezes, which prevents them from accessing financial means in and from the EU and travel bans, which prevent these individuals from entering or transiting through EU territory.

3. The UK

  • UK (Updated export controls military items) – On 8 December 2021, Her Majesty´s Government (“HM Government”) announced a new set of measures to update the current export control regime for military, dual-use and other sensitive goods, software, technologies and services related to those items (e.g. technical assistance), together ‘controlled items’. Export controls are regularly updated to ensure that they continue to address contemporary threats and rapidly changing technologies and other developments (e.g. the Brexit). At the same time, attention is being paid to providing efficient export controls that do not place unworkable administrative burdens for the defence and security industry in the process.

    Firstly, HM Government has introduced new criteria for deciding if a license will be granted or not. These criteria have immediate effect and apply to all decisions (including appeals) regarding exports, transfers, trades and transit/transshipment of controlled items. The amended criteria require that the granting of a license must consider:

    – The international obligations of the UK;
    – Human rights and fundamental freedoms in the country of destination;
    – The effect on internal or international peace and security;
    – If the exported goods could end up being used against UK or allied forces, or if it exposes classified information;
    – The behaviour of the country of the country of destination, such as its attitude on terrorism and international law;
    – The possibility that the exported goods could be diverted to an undesirable end user or use;
    – Whether the exported goods could undermine the economy or sustainable development of the country of destination.

    The amended criteria will not be applied automatically, but on a case-by-case basis, considering all relevant information that is available at the moment of the license application.

    Secondly, the Military End-Use Control will be strengthened through amendments of the Export Control Order 2008. The amendments include i) the addition of China to the list of destinations subject to military end-use controls; and ii) the revised definition of “military-end use”. The latter is deemed necessary to fully address threats to national security, international peace and respect of human rights. The current military-use control falls short, as it applied to exports of otherwise non-controlled items which are intended for use as component in, or production for, military equipment in an embargoed destination.

4. Around the Globe

  • UN (Sanctions disproportionately affect vulnerable groups) – On 8 December 2021, Special Rapporteur Douhan, appointed by the United Nations Human Rights Council, announced that unilateral sanctions disproportionally affect women, children and other vulnerable groups. The imposition of sanctions generally has the effect of preventing the people of targeted countries from fully enjoying their human rights. And this is, according to Douhan, certainly true for vulnerable groups, despite that unilateral sanctions today tend to target specific sectors of economies or specific individuals rather than entire countries.

    Vulnerable groups do not only include women and children, but also people living in poverty, indigenous peoples, the disabled, refugees and migrants. The reason for this is that they are often dependent on social or humanitarian aid, while such assistance can often not be provided as a result of sanctions despite existing exemptions. For example, sanctions may have – an unintended – impact on the extent to which non-governmental organisations can continue to provide humanitarian assistance in sanctioned countries and the maintenance of essential life-supporting infrastructure (e.g. water and health supply systems). In conclusion, the Special Rapporteur calls on countries and governments to seek to minimize the negative impact of the use of restrictive measures on human rights, by providing for broader exemptions and simplifying procedures in sanctions regimes to facilitate the delivery of necessary humanitarian assistance.

  • EU/US (EU and US warn of significant sanctions on Russia) –On 6 December 2021, the European Union and the United States worked together to formulate new sanctions on Russia, if it decides to invade Ukraine. Since November, western intelligence and military agencies have observed a significant build-up of Russian troops and materiel along the Russia-Ukraine border and have warned of a possible Russian invasion of Ukraine. In response, numerous NATO members have announced that they will impose significant economic sanctions on Russia in order to deter military aggression. On a national level, Germany has threatened that it will not connect the new Nord Stream 2 gas pipeline to Europe’s natural gas grid if Russia continues to escalate. While this move would hurt Russia’s economy, it can also result in an energy crisis for the EU due to a serious increase in energy prices. Dutch parliament adopted a motion about a more active role for the EU in its dialogue with Russia to achieve de-escalation. The Dutch government considers a severe European sanctions package to be necessary to prevent a potential military attack. On a European level, no agreement has yet been reached on the sanctions to be imposed. Following the threats of sanctions and an increase of NATO troops throughout Eastern Europe, the Russian government published a list of concessions on December 17th which it demands from NATO as conditions for de-escalation, which NATO partners say they will discuss soon. Russian President Putin re-emphasized his demands in his annual press conference on 23 December 2021.


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